2. Accounting Process Financial transaction- passing journal entry - prepare ledger account Trial balance- two columns Manufacturing A/C - cost of production Trading A/C - gross profit Profit & Loss A/C Profit & Loss adjustment A/C

3. Profitability ratios Return on capital employed (ROCE) (the primary ratio) (Secondary ratios) Profit before interest and tax/capital employed Net profit/Sales Gross Profit/Sales

4. Ratios showing utilisation of resources Sales/capital employed Sales/Total assets Sales/non-current assets Sales/Current assets

5. Financial ratios Current ratio (current assets/current liabilities) Liquidity ratio (current assets-inventory/ current liabilities) Inventory turnover (cost of sales/average inventory) Trade Receivables collection period(Trade receivables*365/credit sales) Trade Payables payment period(Trade payables*365/credit purchases)

6. Investment ratios Gearing (fixed cost capital/total capital) Debt/equity ratio (fixed cost capital/equity) Interest cover Earnings per share Price earnings ratio (PER) Dividend cover Dividend yield

7. Najim Sole Trading For The Years Ended 31 Dec 2011 and 31 Dec 2010 Gross profit percentage: Gross Profit / Sales * 100 2010 --- 60,308 / 172,308 = 35.00% 2011 --- 60,000 / 187,500 = 32.00% Net profit percentage : Net Profit / Sales * 100 2010 --- 21,539 / 172,308 = 12.50% 2011 --- 27,322 / 187,500 = 14.57%